Explained: How Pittsburgh’s public-private startup support org really works

Innovation Works’ investment numbers are drawing fresh attention to how startup support is structured in Pittsburgh.

The state-backed venture development nonprofit has long been one of the city’s most visible startup support organizations, providing early-stage companies with funding, mentorship and other resources they need in order to build. But now there’s a public debate: How much of IW’s money should go directly to founders?

While some local entrepreneurs are arguing that more should reach companies as direct investment, leaders at the organization say funding comes with legal or grant restrictions, meaning they’re limited in how many checks they can write. The conversation has attracted attention from at least one state lawmaker and comes as Pennsylvania considers new funding for innovation programs. 

To understand this debate, here’s a look at how Innovation Works is structured, where its money comes from, how much goes directly to startups and why the conversation has been heating up.

➡️ Jump to a section:
• Where the money comes from, and where it goes
• Direct cash for founders is down year over year
• 18% overhead and a jump in staff expenses
• About that $4M in state money
• The push for more investment checks

Where the money comes from, and where it goes 

IW is the southwestern arm of the Ben Franklin Technology Partners network, a statewide initiative to back early-stage tech companies. The initiative is run in partnership with — and is partially funded by — the PA Department of Community and Economic Development (DCED) through a dedicated authority with its own board of directors. 

IW’s revenue comes from several sources: federal and state grants, private foundations, investment-related returns and other income, like corporate partnerships. In FY2025, for example, IW reported $4.36 million from Pennsylvania’s DCED and $4.25 million in federal grants — the two largest individual revenue sources listed in its federal audit filings. 

Other states have similar groups that use public money, private partnerships or both to help young companies grow, such as TEDCO in Maryland and Ohio Third Frontier. 

IW’s spending falls into two broad categories: program services and supporting services, according to federal filings and an IW spokesperson. (The organization requested statements not be attributed to any specific team member, citing personal concerns.) 

Program services are the costs tied directly to IW’s work with startups. That includes direct investments into companies, AlphaLab accelerator expenses, pitch competitions or other events engaging founders, and operating costs for facilities like its wet lab and robotics shop. Some salaries and professional services are recorded under this category if they contribute to IW’s startup-facing work. 

Supporting services are the back-office costs needed to run the organization, such as accounting, legal services or human resources. These kinds of expenses — often called “overhead” — do not go directly to companies, but help IW deliver its programs.

IW also sets aside some funds, typically 12-18 months of operating runway, in case of funding delays or grant matching requirements, according to the organization.

Direct cash for founders is down year over year

Disbursements to founders — or the amount of IW spending that goes directly to companies through grants, convertible notes, SAFEs or equity investments — made up 25% of its total expenses in FY2025, down from 37% in FY2024, according to federal audit filings. That totaled $6.28 million in FY2024 and $4.71 million in FY2025.

The org says those figures need context. Approximately $14.1 million of IW’s $18.8 million (75%) of total revenue spent during the FY2025 was “prohibited by law or grantor applicable policy from being deployed as direct investment capital,” the organization said in a prepared statement. 

For example, funds from the BNY Foundation are specifically for the annual pitch competition UpPrize and cannot be used for direct investments, according to an IW spokesperson. 

Pittsburgh-based startup founder Ajmail Matin, who helped spark the current debate with a series of LinkedIn posts, has launched a reform campaign, Pittsburgh Compact. He’s calling for 75% of public funding that goes to IW to be disbursed directly to founders. Matin isn’t the first to publicly critique how local economic development organizations spend their funds — 2024 brought this editorial from Pittsburgh Startup News — but his data-backed efforts have attracted new attention.

18% overhead and a jump in staff expenses

IW spending on supporting services — also known as overhead — has hovered between 13% to 18% since 2022, according to its federal audits. 

For comparison, other nonprofits’ overhead is often higher. BBB Wise Giving Alliance’s standard calls for at least 65% of expenses to go to programs (so up to 35% overhead), while Charity Navigator generally looks for 30% overhead or less.  

“Our overhead ratio is roughly around 17%, so this notion that 25% go to investment and 75% of the dollars we’re somehow benefiting from, that is not the case at all,” the IW spokesperson said.

There was also a recent increase in staff thanks to a new infusion of federal dollars, according to the organization. In 2022, IW was awarded a portion of funding from Build Back Better (BBB), a $62.7 million federal grant designed to develop the region’s robotics and manufacturing sector. (A small portion of the BBB grant also supported the underwriting of a storytelling series by Technical.ly via the New Economy Collaborative of Southwestern PA.)

Since then, IW’s staff has grown to a headcount of 38 — an increase of about 25% — to “execute on the grant deliverables,” the organization’s statement said. 

“Our portion of that grant was to essentially provide support to early-stage companies,” the IW spokesperson said, “in the way of prototyping, product development, product refinement, as well as providing programmatic support … things like customer discovery, customer validation, all the things that are required to essentially build a business.” 

Internally, according to its website, IW’s team is led by President and CEO Ven Raju, who previously served as the organization’s chief investment officer; Chief Strategy Operations Officer Kirk Botula; and Chief Business Development Officer Bob Starzynski. IW also has a board of directors, made up of leaders from local companies, universities, foundations and healthcare systems, who approve investments to founders along with IW’s Investment Approval Committee, according to federal filings (the makeup of that committee doesn’t appear to be listed publicly).

About that $4M in state money 

Funding from the DCED can be used for direct company investments, but also for business and technical assistance, technology and entrepreneurial infrastructure, and certain administrative expenses that support IW’s mission, according to PA’s guidelines for Ben Franklin Technology Partners.

IW has discretion over how it allocates state funds across these different eligible uses. 

While IW’s state funding hasn’t been purely used for investments over the last four fiscal years, disbursements to founders have consistently exceeded the amount of funding IW receives from the DCED.

“We get about four million [dollars] from the state every year,” the IW spokesperson said, “what we put in in terms of direct investment is more than that, generally, because we use returns and other sources to do that.”

The push for more investment checks

Capital can be scarce in Pittsburgh, especially for early-stage founders outside a handful of breakout sectors. The demand can feel especially urgent for entrepreneurs building capital-intensive companies, where infrastructure and programming may help, but cash and customers are more important, according to Matin, the founder who recently shared concerns about IW’s budget on social media. 

“I think that in this day and age, especially if you’re building a deep tech company or a tech company that focuses a lot on GPUs, you need money,” Matin told Technical.ly. “You don’t need program staff or program managers — you need money to build these companies.” 

Rep. Jeremy Shaffer (R) — a former startup cofounder representing the 28th District, a northern part of Allegheny County — joined founders and other business leaders in the comments section of Matin’s LinkedIn posts about IW, writing that he’d be “happy to help push for any good policy solutions and better oversee the efficiency of state funding.” 

By meeting with IW and other regional stakeholders, Shaffer plans to “investigate and understand what they’re doing” in the coming weeks to address the needs and objectives of the region, he told Technical.ly. 

“This is just one piece of the puzzle,” Shaffer said, as he and other state reps debate Pennsylvania’s next budget, which includes $100 million proposed for Innovate in PA 2.0, an initiative aimed at expanding access to startup funding and strengthening the state’s broader innovation economy.

The commonwealth funds many initiatives that are already benefiting the Pittsburgh region, Shaffer said, like the Keystone Innovation Zones, innovation offices at local universities and IW, but “it’s not a perfect system. We can improve it.”